Markup vs. Margin Calculator
The confusion that quietly underprices thousands of small businesses. Convert both ways.
Your numbers
Your result
- Price at 50% markup
- $1,500.00
- Gross profit at that price
- $500.00
- Margin that markup actually produces
- 33.3%
- Markup needed for a 45% margin
- 81.8%
- Price needed for a 45% margin
- $1,818.18
- Amount you're underpricing this jobDifference between the price your markup produces and the price your target margin requires.
- $318.18
A 50% markup only produces a 33.3% margin.
To earn a 45% margin you need a 82% markup, not 50%. This single mistake is one of the most common reasons profitable-looking businesses run thin.
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What this number actually tells you
Markup and margin are two different questions about the same job. Markup asks: how much did I add to my cost? Margin asks: what percentage of the price I charged did I keep? Most owners use the words interchangeably, and it costs them real money.
A 50% markup produces a 33.3% margin, not a 50% margin. If you need a 50% margin, you have to mark up 100%. The gap between those two numbers is the difference between a healthy year and a year you can't explain.
This is the single most common pricing error in small business, and it compounds on every job you quote.
How the math works
- 01Price = cost × (1 + markup %).
- 02Margin % = (price − cost) ÷ price × 100.
- 03Markup % = (price − cost) ÷ cost × 100.
- 04Markup needed for a target margin = margin ÷ (1 − margin). Example: 40% margin → 0.40 ÷ 0.60 = 66.7% markup.
- 05Quick reference: 20% markup = 16.7% margin. 30% = 23.1%. 50% = 33.3%. 67% = 40%. 100% = 50%. 150% = 60%.
What to do with the answer
- Decide which number your business runs on — margin — then convert it into the markup your estimators use.
- Print the conversion table above and tape it wherever quotes get built.
- Make sure the cost you mark up includes payroll burden, fuel, and a share of unbilled time. Marking up an understated cost guarantees an understated price.
- Check your software's setting. Many estimating tools label a field 'margin' and calculate markup, or the reverse.
Want someone to read these numbers with you?
The Growth Assessment is a 30-minute conversation about what your numbers are telling you and what to fix first. No pitch deck, no PDF.
Schedule Your Growth Assessment Or call (737) 888-0415Questions owners ask about this
Is a 50% markup the same as a 50% margin?
No. A 50% markup produces a 33.3% gross margin. To achieve a 50% margin you need a 100% markup — you double your cost.
Which should I price on, markup or margin?
Run the business on margin because that's what funds overhead and profit, but give your estimators markup multipliers, because that's how quoting actually works in the field. Convert once, then apply consistently.
How do I convert margin to markup quickly?
Divide the margin by one minus the margin. For a 45% margin: 0.45 ÷ 0.55 = 0.818, or an 81.8% markup.
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What the business actually keeps after everything — including paying you properly.